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SFD Report, 4/00
Report on Smithfield Foods, Inc. (NYSE: SFD)
As of April 16, 2000
Sean G. Thomas
Last Trade: $21 1/4
Shares Owned: 76
Market Price: $1,615.00
Cost Basis: $2,012.50
Total Loss: $397.50
Percent Loss: 19.75%
Strong Buy 1
Moderate Buy 3
Monday April 10: USDA to assess impact of hog plant sale on farmers
Agriculture Department teams will talk to farmers in the Dubuque, Iowa,
area to assess the impact on hog farmers of plans by Smithfield Foods
Inc. to buy a packing plant from Farmland Foods Inc., it was announced
The sessions will be held on April 17 and 18 in four surrounding towns
in northeastern Iowa, northwestern Illinois and southwestern Wisconsin.
Information gathered by the teams will be used by USDA to determine if
the sale violates the Packers and Stockyards Act.
Smithfield Foods has indicated it might end slaughtering operations at
the plant if it completes the transaction.
Tuesday April 11: Meat and poultry firms to create business Web site
Six of the world's leading meat and poultry processors said on Tuesday
they agreed to create an online business-to-business marketplace for
meat and poultry products, service and information.
IBP Inc, Cargill Inc., Smithfield Foods Inc., Tyson Foods Inc., Gold
Kist Inc., and Farmland Industries Inc. said they will invest $20
million toward the new venture, which will operate as an independent
The companies said the marketplace will be a neutral Web-based exchange
that will facilitate faster and more direct product comparison and price
The Web site, expected to launch this summer, will be open to buyers and
sellers of meat and poultry products.
Each of the investing companies will have a seat on the board of
“The automated exchange will improve efficiencies in an industry that
still relies heavily on faxes and phone communications,” said Bill
Buckner, president of Excel Corp., Cargill's red meat business. “The new
company will be charged with the development of systems that complement,
not compete with our customers business channels and supply chains.”
The announcement follows news last month of the creation of a food and
beverage e-commerce marketplace, Novopoint.com, that also has Cargill
has one of its main sponsors. Minneapolis-based Cargill, the largest
private company in the United States, is a dominant player in many
markets for food products.
Tuesday April 11: US farm income biggest problem facing farmers-USDA
The most profound problem facing U.S. growers is not low commodity
prices but the decline in farmers' share of what consumers pay for food,
U.S. Agriculture Secretary Dan Glickman said on Tuesday.
Consolidation within the U.S. farm sector and changes in America's
eating habits have both hurt farm income, he said.
“What you're seeing is a dramatic revolution in the food chain in
America,” Glickman told reporters at a wide-ranging briefing on farm
Earlier this year, the USDA projected farm income would drop nearly 20
percent this year to $49.7 billion, down $9.4 billion from last year.
“This is a much more profound problem for the farmer than what the price
of a particular commodity is this particular year,” he said.
“If the current trends continue, you're going to see the farm share of
the consumer dollar continue to drop and that worries me very much,”
Some 2,000 farmers held a rally last month on Capitol Hill in which they
complained that growers received only about 39 cents from a typical
restaurant lunch costing $ 8.
U.S. farmers fear the rapid pace of acquisitions by large agribusiness
companies like Cargill Inc and Smithfield Foods Inc. will mean fewer
buyers for corn, wheat, soybeans, pigs and cattle.
Democrats and Republicans from farm states are offering federal
legislation that aims to ensure fair prices are paid to family-owned
farms by toughening agricultural antitrust laws. The Senate Agriculture
committee will hold a hearing on the proposals on April 27.
On Monday, the U.S. Agriculture Department said it would dispatch a team
of experts to Iowa, Illinois and Wisconsin to determine if the planned
sale of a packing plant to Smithfield would hurt hog farmers.
But growing concentration in agribusiness is only one factor affecting
farmers. Glickman said farm income was also cut by consumers' growing
preference for prepared foods.
“Americans are eating things already prepared for them, which further
diminishes the ability for the farmer to get a bigger share of the food
dollar,” he said.
To boost U.S. farm income, Glickman advocated effective enforcement of
antitrust laws and the expansion of organic farming, an area not
dominated by large enterprises.
The USDA earlier Tuesday predicted U.S. corn and soybean prices this
year would continue slumping. Farmers are expected to receive about
$4.70 a bushel for soybeans this year, down from $4.93 a bushel last
year, with smaller declines for corn and wheat.
Thursday April 13: Senator Asks U.S. Review of Internet Meat Market
The Justice Department should investigate a plan by six large U.S. meat
processors to create an Internet meat exchange and what impact it may
have on farmers, according to a request by Senator Paul Wellstone.
A Wellstone aide said on Thursday there had been no response yet from
In a letter to Assistant Attorney General Joel Klein, Wellstone said he
was concerned about the impact on livestock producers.
“I believe this case warrants your close attention,” wrote Wellstone,
Minnesota Democrat, in requesting the review.
“While this new alliance purports to enhance efficiencies, I am
concerned about the market implications of our nation's largest meat
agribusinesses sharing marketing information and resources,” Wellstone
wrote. “Therefore, I request that the Antitrust Division of the Justice
Department initiate a complete and thorough examination of this alliance
and its possible implications for our nation's family farmers and